Activity based costing: Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product. Manufacturing overheads allocation: Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows T o t a l o v e r h e a d c o s t t o b e a l l o c a t e d T o t a l d i r e c t l a b o r h o u r s * D i r e c t l a b o r h o u r s u s e d f o r m a n u f a c t u r i n g a p a r t i c u l a r p r o d u c t Requirement 1: The setup cost per unit for the given products using overhead rates based on direct labor hours.

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Answer 1

Question

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

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Answer 2

Question

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

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Answer 3

Question

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

Expert Solution & Answer

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See solution

Answer 5

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

Answer 6

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

Answer 7

Chapter 4, Problem 16E

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labour hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 1:

The setup cost per unit for the given products using overhead rates based on direct labor hours.

Answer 8

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

Answer 9

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 2:

The setup cost per unit for the given products using number of setups as the basis of setup cost allocation.

Answer 10

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

Answer 11

To determine

Concept introduction:

Activity based costing:

Activity based costing is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead and then identifying the costs related to a particular product.

Manufacturing overheads allocation:

Manufacturing overheads are the overheads incurred in manufacturing plants for manufacturing a product. Enterprises use several methods of allocating these factory overheads like on direct labor hours, activity based method etc. In overhead cost allocation using direct labor hours, the total direct labor hours incurred are identified and the costs are allocated between products using the direct labor hours incurred in manufacturing the particular product. The formula for cost allocation for a particular product based on direct labor hours would be as follows

Total overhead cost to be allocatedTotal direct labor hours*Direct labor hours used for manufacturing a particular product

Requirement 3:

The better method among the given two methods and the reason for the same.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4 - Prob. 1MCQ Ch. 4 - Prob. 2MCQ Ch. 4 - All of the following are examples of batch-level...Ch. 4 - Prob. 4MCQ Ch. 4 - Prob. 5MCQ Ch. 4 - Why are overhead costs allocated to products and...Ch. 4 - What are three common methods of assigning...Ch. 4 - Why are direct labor hours and machine hours...Ch. 4 - What are the advantages of using a single plant...Ch. 4 - The usefulness of a single plant wide overhead...

Solution Summary: The author explains the concept of activity based costing, which is the method of cost allocation of overhead expenses by first identifying the costs pool for any specific overhead.

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